Progressive Talking Points 9/26/05

• Was Frist honest with Americans about his knowledge of the “blind trust” managing his stock in his family’s health company? In January 2003, Frist said in a television interview, "I think really for our viewers it should be understood that I put this into a blind trust. So as far as I know, I own no HCA stock…I have no control. It is illegal right now for me to know what the composition of those trusts are. So I have no idea.” That was not a true statement. The Associated Press reports "just two weeks before those comments, the trustee of the senator's trust, M. Kirk Scobey Jr., wrote to Frist that HCA stock was contributed to the trust. It was valued at $15,000 and $50,000." Even if investigators determine Frist's recent sale was legal and ethical, Frist needs to explain why he lied to the public about his trusts.
  
  
• Did Frist engage in insider stock trading? Frist ordered his HCA stock to be sold at the same time company insiders were selling large quantities of their stock. For example, as the Wall St. Journal reports, "From June 1 to June 10, six insiders sold a total of 341,300 shares valued at $18.6 million, according to Thompson Financial.” A month later "[T]he stock’s price dropped 9 percent in a single day because of a warning from the company about weakening earnings," according to the Washington Post. If Frist possessed material non-public information about HCA, the sale of his stock could constitute illegal insider trading. The Securities and Exchange Commission and the Justice Department are investigating.
  
  
• Has Frist violated Senate ethics rules?On June 13, 2005, Frist contacted his trustee and instructed him to sell all of his HCA stock. Under Senate ethics rules, Frist would only be allowed to tell his trustee to sell a specific stock if the stock “creates a conflict of interest or the appearance thereof due to the subsequent assumptions of duties," according to the Senate Ethics Committee. Fred Wertheimer, president of Democracy 21, identifies Frist's problem: "I don't know what new duties he would point to above and beyond becoming majority leader, and that was three years ago."